Bayou Business Review, 10/5/98 p. 31
After preparing my house for the expected arrival of Hurricane Georges, I drove my wife and our three children to Texas to visit my parents. On the drive back I thought about the aftermath of the storm. For my family and for many of us in the Houma-Thibodaux area, the aftermath was simple, remove boards from windows and put things back into their places. In southern Mississippi and southern Alabama, and even in Louisiana Parishes to our east, the story is likely to be far different.
Certain items are sure to be in high demand after a disaster like a hurricane. Ice is sought to help keep valuable food from spoiling and to keep drinks cold to help deal with the sweltering heat of the Gulf Coast sans electric power. Roofing shingles, flooring and other building supplies are also sought to rebuild and repair storm damage. Various tools, such as chainsaws, for repair work and debris removal are sought as well.
I keep using the word "sought" because people usually try to buy such things after a natural disaster, yet are seldom able to get what they seek. Some sellers are closed. Sellers who are open, run out of supplies or carefully ration what they sell with one-per-customer terms. Here, the amount buyers wish to buy far outstrips the amount the sellers wish to sell—a shortage.
Shortages are usually self-eliminating. When sellers see buyers lining up for items that the seller just can’t keep in stock, sellers know they can raise prices and not lose sales. Prices rise and higher prices get buyers to cut back until the shortage disappears.
Shortages are usually self-eliminating, but not always. In Louisiana, as in most states, we have laws against "profiteering," the raising of prices above ordinary levels during times of disasters. Anti-profiteering laws are well intentioned, trying to protect people who have already been harmed by acts of nature from being harmed again.
Thanks to the "kindness of strangers" who live in areas not hit by the disaster, we are able to get some of the items that are in short supply. There are two problems with relying on the kindness of strangers. First, such strangers know far less about what items we will need than we do. Second, there is less kindness itself is often in short supply.
However well intentioned anti-profiteering laws may be, they impede our recovery from natural disasters. Not only do such laws not encourage people from economizing on their use of ice and other items in short supply, but they also fail to encourage new supplies and repair workers to come from far away, the way price increases would.
Similarly, price increases would encourage local people to find new ways to get things done. People seldom realize that operating a store is more expensive after a disaster. For instance, some stores can open after a storm, but can only operate using generators, a far more costly way of getting power than through the electric company's power lines. But after a storm, those power lines are usually dead. Many cannot afford to operate their businesses at a loss.
While anti-profiteering laws do impede our efforts at recovery, raising ones prices at such times may not be good business. On the radio I heard stories of hotels and motels in Houston and the Shreveport-Bossier City area that gave storm evacuees special discounts even though they were full. I have also heard stories of people giving ice away. People do not quickly forget kindness, nor do they forget being taken advantage of by profiteers.
Anti-profiteering laws are not only counter-productive, but they are also unnecessary. Local businesses that depend on the trade of local customers who need to raise prices to operate at such times should offer an explanation to customers. But most will refrain from profiteering to be seen as a good neighbor.
Profit is gained by filling people's wants. With profiteering outlawed, we deny ourselves.
A final word. If you are looking for a way of giving thanks for being spared, there are some folks in St. Bernard, Plaquemines, St. Tammany, south Mississippi, south Alabama, the panhandle of Florida, Puerto Rico, and the Dominican Republic (home of Sammy Sosa) who could use some kindness.